EUR/CHF Outlook:
The EUR/CHF exchange rate is likely to decrease as it is currently trading 1.7% below its recent average and near recent lows. The lack of strong supportive factors suggests a downward pressure on the euro.
Key drivers:
• Rate gap: The Swiss National Bank maintains a 0% interest rate, while the European Central Bank has held rates steady at 2%, contributing to the franc's relative strength.
• Risk/commodities: With oil prices near 90-day highs, rising costs may further strain the Eurozone's economy, limiting the euro's recovery potential.
• One macro factor: German CPI data remains crucial, as any sign of cooling inflation could hinder euro strength.
Range:
EUR/CHF is expected to drift within its recent range, primarily influenced by upcoming economic data and current market conditions.
What could change it:
• Upside risk: A significant improvement in Eurozone inflation data could trigger euro strength.
• Downside risk: Renewed geopolitical tensions or a worsening economic outlook could lead to further weakening of the euro.